Posts with tag: house prices

House Price Declines Spread Across More UK Regions

Published On: August 15, 2018 at 9:53 am

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House price declines have spread across more UK regions, in the face of rising supply and falling demand, according to the August Asking Price Index from home.co.uk.

On average, house prices in England and Wales fell by 0.3% in the month. The largest monthly declines were recorded in London and the South East (both 0.6%).

The North West, West Midlands and Scotland were the only regions to record positive house price growth.

Rising supply has led to market saturation in the East of England, and this region looks set to join London and the South East in negative annual growth before the end of the year, home.co.uk reports. The same pattern of a supply-induced slowdown, combined with a pullback in demand, is now affecting the East Midlands and the South West, which is exerting downward pressure on prices.

The West Midlands and North West look like the next regions to be similarly affected, as the negative sentiment that originally emanated from London and, later, the South East, spreads north and west. Consequently, overall annual house price growth is trending to zero and stock levels are trending up.

home.co.uk believes that London and the South East’s woes are far from over, as the two regions suffered the largest price declines over the past month. Asking prices in the capital have been slowly falling for 26 months and, thus far, the only solace is that the latest figures suggest that, perhaps, supply has stopped rising.

Meanwhile, northern property markets continue to perform strongly, as does Wales, which is leading price growth ahead of the West Midlands. These regions – several years later in the cycle than London – are still showing significant market activity, and low or falling time-on-market figures. Although, as mentioned earlier, slowdowns appear imminent in the West Midlands and North West.

The typical time-on-market continues to rise annually in London (10%), the South East (9%) and East of England (14%). Overall, the average time-on-market for England and Wales has increased to 84 days – the same as in August 2017.

Overall supply of properties for sale in the UK has risen by 4%, while the total stock for sale has increased by 10.3% year-on-year.

In August 2017, the annual rate of house price growth stood at an average of 3.3%; today, it is just 1.1%.

Annual House Price Growth Hit 3.3% in July, Reports Halifax

Published On: August 8, 2018 at 9:30 am

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Annual house price growth hit an average of 3.3% in the three months to July, with the typical property value in the UK now standing at a record high of £230,280, according to Halifax’s latest House Price Index.

On a monthly basis, the average price rose by 1.4% between June and July, while quarterly house price growth stood at 1.3% in May-July.

Housing activity

Halifax also reports that UK home sales fell by 3% in June, to 96,340. In the three months to June, sales were unchanged from the previous three months. The volume of residential property sales has been broadly flat over the past year, and is expected to remain so in the coming months.

Industry-wide figures from the Bank of England show that the number of mortgages approved to finance a home purchase – a leading indicator of completed property sales – increased by 1.4% between May and June, to 65,619 – the second highest monthly level seen this year. There are some encouraging signs for the housing market, with mortgage approvals up by 4.1% since April. However, demand remains weak, Halifax notes.

Annual House Price Growth Hit 3.3% in July, Reports Halifax

Annual House Price Growth Hit 3.3% in July, Reports Halifax

Similarly, new buyer enquiries have been flat or falling for 18 consecutive months, while agreed sales deteriorated between May and June. On historical figures, both sets of data point to mortgage approvals holding broadly flat until the end of 2018. On the supply side, new instructions, which had dropped for 26 consecutive months, have now edged up in the past two months.

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Russell Galley, the Managing Director of Halifax, comments on the index: “House prices picked up in July, with the annual rate of growth rising from 1.8% in June to 3.3% in July – the largest increase since last November. The average house price is now £230,280 – the highest on record. House prices in the three months to July were 1.3% higher than in the previous quarter – the fastest quarterly increase, again, since November.

“While the quarterly and annual rates of house price growth have improved, housing activity remains soft. Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggests that approvals will remain broadly flat until the end of the year.

“In contrast, the labour market remains robust, with the numbers of people in employment rising by 137,000 in the three months to May, with much of the job creation driven by a rise in full-time employment. Pressures on household finances are also easing, as growth in average earnings continues to rise at a faster rate than consumer prices. With regards to the recent rise in the Bank of England base rate, we do not anticipate that this will have a significant effect on either mortgage affordability or transaction volumes.”

The Founder Director of independent estate agent James Pendleton, Lee James Pendleton, also gives his thoughts: “Annual growth just exploded to a level not seen since the autumn, another traditionally busy moving period.

“This shift up a gear has undone much of the damage of recent months, with annual price growth having failed to keep pace with inflation in every month this year bar March.

“With two negative quarters behind us, many were hoping the usually busy summer period would produce a bit of a bounce, and this is a promising start.

“Buyers were seemingly happy to shrug off the possibility of a looming rate hike, as buyer incentives and low supply continue to play the dominant role in charging up the market.

“The market still needs a healthier flow of transactions, so it would be better for the numbers of homes changing hands to grow faster than prices. However, it is these demand-side carrots, such as the Help to Buy scheme and Stamp Duty relief for first time buyers, that appear to have the upper hand over rates and Brexit when it comes to winning the battle of sentiment that is playing out in people’s minds.”

Prime Central London Prices and Sales Fall Again

Published On: August 6, 2018 at 9:33 am

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House prices and sales in prime central London have fallen again over the past quarter, according to the latest Residential Index from investment advisory London Central Portfolio (LCP).

The report assesses the health of the property market in prime central London, Greater London, and England and Wales as a whole. The latest index covers June 2018.

Prime central London

The average house price in prime central London during June (excluding new builds) was £1,754,317. This is down by 8.2% on an annual basis and 6.9% on the previous quarter.

The number of transactions in prime central London in the year to June fell by 8.5%, to levels last seen during the Global Financial Crisis. These declines have been seen across the market, with new build sales dropping by 17.3%.

New build prices, however, have reached a record average high of £3,209,089, marking an almost 90% premium over existing stock in prime central London.

Naomi Heaton, the CEO of LCP, comments: “Prices in prime central London in June now stand at £1,754,317, a fall of 8.2% compared with this time last year. They are currently no higher than they were almost four years ago, in a market that has enjoyed annual average growth of 9.9% since 1996.

Prime Central London Prices and Sales Fall Again

Prime Central London Prices and Sales Fall Again

“In December 2014, Graduated Stamp Duty was introduced, increasing the top rate for more expensive properties from 5% to 12%. Since then, there have been two general elections, a referendum and six further tax changes to the residential sector. This combination has lead to a significant readjustment in prices. It has also lead to transactions falling to the same level as seen in the Global Financial Crisis, and which now stand at 3,760. This is as few as 72 a week and has significant ramifications.

“Countrywide (the UK’s largest estate agent) issued a profit warning in June for their first-half earnings, leading to an almost 30% fall in share price. Listed house builders are also seeing falling share prices amongst concerns of a chaotic Brexit and an increase in property down-valuations. Whilst there was an increase in the proportion of higher value transactions in the first part of 2018, this surge appears to have dissipated. This has been reflected in the average price falling by 11.1% from a high of £1,973,140 in February.”

Greater London

Over the whole of Greater London, the average house price in June (excluding new builds) stood at £628,807, following an annual increase of just 0.6%.

Home sales in the year to June dropped by 8.0%, and remain just above the level seen during the Global Financial Crisis. These falls have been recorded across Greater London, with new build transactions decreasing by 12.6% over the same period.

New build house prices reached a record high of an average of £755,553 in June, representing a 26.4% premium over existing stock.

Heaton says: “Whilst there has been a rally in average prices in Greater London over the last quarter, with a record high of £628,807 achieved in June, annual prices have seen growth of just 0.5%. While these statistics do not reflect the discount from original asking price to sale price, a disconnect between seller and buyer expectations can be observed. This is undoubtedly a contributing factor to the sluggish level of transactions.

“Current annual sales have fallen 8% and now stand at 87,080, just above the levels last seen during the Global Financial Crisis. With current residential tax policies and the lack of a defined plan for a post-Brexit UK contributing to economic uncertainty, it appears that only those who have to move are doing so.

“Falling prices will only exacerbate this, as sellers are not motivated to move if they see the value of their home decline. Soft prices and a general trend towards down-valuing properties could also have a concerning impact on the Government’s Help to Buy scheme, which has enabled buyers to take a 95% loan. Existing owners may now find they are in negative equity when it comes to remortgaging their homes, with serious repercussions.”

England and Wales

The average house price in England and Wales (excluding new builds) was £287,558 in June. This represents a quarterly rise of just 0.5%, with annual growth standing at 0.8%.

Sales over the year to June fell by 3.2%, and are at their lowest level since the introduction of Graduated Stamp Duty in December 2014.

New build house prices are close to a record high of £343,244 at present, representing a 20.1% premium over existing housing stock in England and Wales.

Heaton gives her thoughts on the figures: “Whilst prices in England and Wales have picked up slightly in June, by 1.3% to £287,558, on an annual basis, prices have risen by just 0.8%. This very low level of growth is a common theme throughout prime central London and Greater London, as well.

“Annual transactions also remain supressed, falling a further 3.2%. They are at their lowest level since the introduction of Graduated Stamp Duty. This subdued activity is now starting to have a very tangible effect on the UK, both amongst house builders and estate agents. Currently, with the uncertainty created around Brexit, there does not appear to be anything significant on the horizon which will help buck this trend.

“Whilst increasing affordability through falling prices may benefit first time buyers and second steppers, it tends to have the counter effect of supressing sales activity. The Government is unlikely, and probably unable to, reverse the recent tax changes, given the political consequences. Therefore, it looks as though it will adopt a wait-and-see attitude for the time being, although the economic consequences of falling transactions and a reduced tax take are beginning hit home.”

Nationwide’s July House Price Index Shows Slight Rise in Growth

Published On: August 2, 2018 at 9:24 am

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Nationwide’s July House Price Index has now been released, and it is showing a slight rise in house price growth. Annually, there has been a growth in house prices to 2.5% in July, up from 2.0% in June.

Robert Gardner, Nationwide’s Chief Economist, has commented: “…Annual house price growth remains within the fairly narrow range of 2-3%, which has prevailed over the past 12 months, suggesting little change in the balance between demand and supply in the market.

“Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.”

The Bank of England’s Monitory Policy Committee (MPC) is meeting today to discuss the likelihood of an increase to interest rates, which could rise by 0.25%.

Lucy Pendletonco-founder director of independent estate agents James Pendleton, has commented on Nationwide’s House Price Index: “The housing market has bobbled up and is beating inflation but only by a hair’s breadth. However, this is only going to be the second most watched number of the week, with a likely rate rise only hours away.

“Finally something might happen which will, at least temporarily, move the conversation away from Brexit, which for ordinary homeowners who are fascinated by their house price has only ever been a fuzzy political puzzle whose association with predictions of economic Armageddon have been difficult to reconcile.

“Rate rises at this level are more psychological than any other, but even if the guidance says rates will remain low, the experts have been wrong before and buyers are prone to being overly cautious.

“Buyers think five years ahead and, when buying a house, focus on how secure their job is and what their income multiple is. They are very much aware that the end of their fixed term deals will arrive quicker than they’d like.

“The truth is that the fundamentals of Britain’s housing market have been little affected by Brexit.

“London has continued to suck in overseas cash, and the market in the capital has risen the quickest and will fall the fastest, which is what it is doing. The only people shocked by this are the same people who throw a ball in the air and act surprised when it hits them on the nose.

“A rise in rates this week is what will really focus minds, so that’s still the one to watch.”

Nationwide House Price IndexKobi Lehrer, co-founder of property investment platform British Pearl, has said: “These figures represent the best growth we have seen since January and call for a collective sigh of relief for those who feared the market was entering a terminal decline.

“Last month’s collapse in the growth figure was the lowest for five years but monthly changes can produce these lurches, before growth recovers quickly the following month as if to balance it out.

“As ever, we’re seeing a continuingly-growing population, building that can’t keep up with demand and the drip, drip of homes hitting the market continuing to hold up prices even though transaction levels have been low for a while.

“The fact transaction levels have remained stubbornly low is what says the most about this market.

“Let’s not forget that one in five properties is still privately rented. Despite the well publicised retreat in buy-to-let tax reliefs in recent years, there has so far been no great landlord exodus in historic terms.

“Conditions will continue to tighten on them over the next few years but the lack of a flood of supply created by exiting investors still speaks volumes about where they think this market is at the moment.

“While annual rises of over 5% seem to be behind us for now, investors are still finding that kind of growth if they pick wisely, and that goes for yields too. The HPIs have a tendency to mask pockets of opportunity, just as the FTSE disguises the outperformance of individual companies. It will be some comfort to investors and homeowners that a rate rise this week probably still won’t have the pulling power to force a significantly greater correction in prices lower.”

Property Sales are Increasing, According to Recorded Registrations

Published On: July 31, 2018 at 9:28 am

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An increase in property sales registrations has been recorded by the Land Registry during June this year.

According to the Land Registry’s Price Paid data, there have been 79,690 sales lodged for registration in June. This is up by 3.2% on May.

There has now been an increase in lodged transactions at the Land Registry for two months in a row. This is the first time such an increase has occurred this year since May.

Looking at the figure in June, however, it was down 7% annually. 387 of the sales registered during June were for residential properties in England and Wales for £1m and higher. London saw the highest amount of property sales over the £1m, at 230. Birmingham, Manchester and Cardiff only saw one each.

The most expensive residential sale during the month was in Kensington & Chelsea. This London detached property sold for £28.5m.

Looking at the other end of the scale, the cheapest sale was for a terraced property in Country Durham. This residential property went for just £17,250.

Commercial property sales saw the most expensive property in June 2018 going for £71.2m, which was located in the City of London. The cheapest commercial sales from June 2018 included property in Waltham Forest, London, and the Isle of Wight, both for £100 each.

There has also been a recent increase in home sales by 13% between May and June. This is according to provisional data from HM Revenue & Customs (HMRC). Annually, however, the number of residential transactions appear to have dropped by 8.8% for June.

Neil Knight, the Business Development Director or Spicerhaart Part Exchange & Assisted Move, has commented: “At the moment, it appears that it is first time buyers – being incentivised by schemes like Help to Buy – purchasing new builds that are driving both the property and mortgage markets.” Take a look out our full article, to find out more.

House Prices Starting to Grow Once Again in London, Hometrack Reports

Published On: July 26, 2018 at 8:54 am

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House prices are starting to grow once again in London, causing the average increase across cities in the UK to rise, according to Hometrack’s latest UK Cities House Price Index.

In June, for which the most recent data is available, average house price inflation across cities in the UK stood at 4.6% on an annual basis. Over the first half (H1) of 2018, average prices were up by 4.4%, compared to 0.2% in H2 2017. This substantial increase in growth was caused by an uplift in London, Hometrack believes.

It is Manchester, however, that recorded the highest annual growth rate in June (7.4%), followed by Liverpool (7.2%), Birmingham (6.8%) and Leicester (6.5%).

On the opposite end of the scale, house prices have fallen in real terms (growth below the 2.4% rate of consumer price inflation) across six cities: Southampton, Oxford, Belfast, London, Cambridge and Aberdeen.

London’s annual growth rate was 0.7% in June, but an increase in the three-month growth rate has been recorded. Hometrack’s more granular house price indices confirm this trend, with a higher number of London postcodes recording monthly price gains; more postcodes are registering month-on-month price increases than declines.

Discount from asking prices

The current stabilisation of London house price growth reflects greater realism on the part of property sellers in the wake of a two-year re-pricing process, Hometrack believes. Since 2016, the discount from asking prices to sales prices has widened, reaching a high of 7% in inner London at the end of 2017.

House Prices Starting to Grow Once Again in London, Hometrack Reports

House Prices Starting to Grow Once Again in London, Hometrack Reports

Over H1 2018, the level of discounting to achieve a sale has started to narrow in inner London, to 6.7%. Discounts have also stabilised in outer London and the adjacent commuter areas. This is consistent with less downward pressure on prices.

While Hometrack expects the rate of price growth to remain weak across the capital, greater realism on the part of sellers is positive news for transaction volumes, which have dropped by 20% since 2014.

The discount from asking price to sales price provides important insight into the relative strength of local housing markets. For instance, Liverpool has the second fastest rate of growth as prices rise quickly off a low base. The level of discounting in the city has narrowed over the past two years, but remains above average, at 4.6%.

Manchester had the lowest level of discounting (2.2%) across all cities in England and Wales. This remains on a downward trend, and it is no surprise that the city is currently recording the fastest growth in prices.

House price growth in Birmingham has moderated over the past year, while the gap between asking and achieved prices has started to plateau, standing at 2.8%. Hometrack expects a continued moderation in the rate of house price growth over the next 12 months.

Cities across southeastern England have recorded slower price growth, as affordability pressures increase. Southampton, for example, is registering annual house price growth of just 2.1%, while the level of discounting has risen from 2% to almost 4% since the third quarter (Q3) of 2017.

Prospects for H2 2018

The firm predicts that current trends will continue into H2 2018, as housing market forces continue to play out against the backdrop of rising employment levels and low mortgage rates.

The main risks that it identifies on the horizon are: the timing and scale of any increase in mortgage rates; and how the Brexit negotiations unfold in the coming months and in the run-up to March 2019.

Graham Davidson, the Managing Director of buy-to-let specialist Sequre Property Investment, comments on the latest report: “Once again, Manchester has the highest annual growth rate of 7.4% and it has now been joined at the top of the list by its near neighbour Liverpool, at 7.2%. This is certainly no surprise, considering the hive of activity that’s ongoing in these great cities.

“For several years now, buy-to-let investors have turned their backs on the south to take advantage of the low prices, high yields and capital growth in the north. However, with the lack of true discounts available, investors will need to be far more selective with their investment to truly make the numbers stack up. That doesn’t mean that there aren’t deals to be had; you just need to know where and how to find them.”

He adds: “Liverpool’s growth of 7.2% is up from just over 2% this time last year – something we’ve been heavily predicting would happen. Deals here are flourishing, due to the demand and because the returns are incredibly healthy. For anyone considering investing in this city, now is the time to do it.”